STURGIS, MI (WTVB) – Abbott Laboratories in Sturgis has agreed to pay $385 million to settle civil allegations surrounding unsanitary conditions and bacterial contamination at its baby formula production factory.
The massive settlement, announced Monday by the U.S. Department of Justice, resolves claims that the company knowingly manufactured popular powdered formulas like Similac in an environment plagued by roof leaks, standing water, and inadequate safety testing. The problems originally prompted a nationwide product recall and the temporary closure of the facility in 2022, which severely strained inventories and triggered a historic, months-long national shortage of baby formula.
The financial penalty claws back revenue earned from selling formula through government assistance initiatives like state Medicaid programs and the U.S. Department of Agriculture.
As part of the resolution, three whistleblowers who filed a lawsuit on behalf of the government under the False Claims Act will receive $69 million from the federal portion of the recovery.
Despite the substantial layout, Abbott Laboratories stated that the agreement does not represent an admission of fault or liability.
The company also maintained that none of its distributed, unopened products ever tested positive for Cronobacter sakazakii, the harmful bacteria central to the initial federal investigation.
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